That makes sense, Wilkerson says, since UITs do not have boards of directors. Moreover, he says, UITs have not experienced any of the abuses seen in the mutual fund industry.
Paul Schott Stevens, president of the Washington-based Investment Company Institute, says ICI had asked the SEC to allow a fund's independent directors to decide whether the board should be chaired by an independent director.
However, he says, ICI pledges to help mutual funds implement the SEC's new governance reforms, including the independent chair requirement, fully and effectively.
Under the new rules, independent directors must constitute at least 75% of the fund's board. One of the independent directors must be the chairman. This requirement, the SEC says, is designed to strengthen the presence of independent directors and improve their ability to negotiate lower advisory fees and other important matters on behalf of the fund.
In addition, funds will have to allow independent directors to hire their own staff, which the SEC says will help the independent directors deal with matters on which they need outside assistance.
The independent directors will also be required to hold a separate meeting at least once a year to provide the opportunity for candid discussions about management performance, the SEC says.
Reproduced from National Underwriter Edition, June 25, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
